Will I Lose Everything If I File For Bankruptcy
Although some of your personal assets and belongings could be sold by your LIT to partially satisfy your debts, usually personal items and household goods are not affected.
Although the procedure for filing for bankruptcy follows Federal guidelines, each province and territory determines the list of assets that are exempt and the limits on the value of each type of exemption.
- all personal clothing
- household furniture, food, fuel and equipment in your permanent home
- motor vehicle
- tools necessary to your work
- certain farm property
- most pension plans and life insurance policies, and all RRSPs
Also, things owned entirely by your spouse are exempt. However, if you and your spouse own things jointly, you may have to sell the portion that you own. It is a good idea to discuss these issues with your trustee before you file for bankruptcy.
Will Bankruptcy Affect My Credit
There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be badly damaged. Bankruptcy will probably not make things any worse. The fact that youve filed a bankruptcy can appear on your credit record for ten years. But since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.
What If I Have Too Much Equity In My House
You still have options. The amount of equity above the exemption is in question. You also have other options. To help people understand this scenario and the scenario when equity is below the limit, we built the following debt relief options comparison calculator to help you understand the different options, costs of those options, and pros and cons.
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The Sole Proprietor And Chapter 13 Bankruptcy
Only individuals can file a Chapter 13 bankruptcy case. So if your business is a partnership, corporation, or LLC you cannot file Chapter 13 on its behalf.
If you are a sole proprietor, you can include both personal and business debts in your Chapter 13 bankruptcy just like you can in a Chapter 7 bankruptcy. A Chapter 13 bankruptcy might be your best option if the sole proprietorship has income coming in. You might be able to keep the business going while paying a lesser amount on both personal and business obligations that are nonpriority unsecured debtsuch as credit card bills, utility payments, and personal loans.
You might run into a problem, however, if your sole proprietorship requires you to keep a lot of goods, products, or expensive equipment on hand. Although Chapter 13 bankruptcy allows you to keep your property, you still must be able to protect it with a bankruptcy exemption . Otherwise, you have to pay the value of the nonexempt assets in the three- to five-year repayment plan. For instance, if you owned $150,000 in nonexempt construction equipment, you’d need to pay your creditors $2,500 per month, plus any other required amounts, for five years.
Because many business owners are tight on cash, keeping all the property that you need might not be feasible if you don’t have enough coming in to pay a hefty monthly plan payment.
What If I Dont Want To Keep My House
Of course, not everyone sees their home as a benefit.
If youd rather get rid of it and find another place to live, then you can.
This choice is up to you, in most scenarios, you can keep your home unless you dont want it.
Need help with bankruptcy?
If so, then you need the help of a Licensed Insolvency Trustee.
Contact us now, and we will arrange an appointment to go through your financial situation in great depth.
Our team will help you figure out if bankruptcy is the right path, and how to retain your home if you choose to file for it.
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How Do I Know How Much Equity I Have
You can calculate your homes equity by taking the value of your house, and subtracting the amount you owe on your mortgage and the currently owed property taxes from this value.
House value amount owed on mortgage currently owed property tax = Equity
In most personal bankruptcies, the home must be sold so that this equity value can go to your creditors.
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Will I Lose My Home If I File Bankruptcy And Have A Mortgage To Pay
The majority of Canadians in debt will have a mortgage to pay.
A mortgage is a secured debt, which means that you have an asset secured against it.
In the case of a mortgage, your home is that asset.
If youre unable to pay your mortgage, the lender can seize your house to make up for this.
However, if you have been making mortgage payments and theyre up-to-date, then theres no reason to be worried.
Provided you can keep making the monthly payments, nothing will change.
Youll still have the house, you just carry on paying the mortgage.
In fact, you can try to negotiate with your mortgage provider to adjust the loan terms.
This may help you spread the payments out over a longer period, reducing the monthly costs and making it easier to pay.
Gifts And Transfers Of Property Before Filing For Bankruptcy
Any gifts or transfers of property that you may have made just prior to filing for bankruptcy need to be divulged to your LIT and can be reversed by the court. Any transfers you made in the year before you filed for bankruptcy will need to be reviewed by your LIT. You will also need to tell your LIT if you made any payments or gave preferential treatment to any of your creditors in the three months before declaring bankruptcy .
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Can Spouses File A Bankruptcy Together
Yes. The Bankruptcy Code allows spouses to file jointly for bankruptcy. The question of whether you and your spouse should file a bankruptcy together depends on whether you both are liable for the debts involved. You should remember that filing bankruptcy generally protects only the person who files for it.
Can I File For Bankruptcy And Keep My House In Texas
Our office frequently fields the following questions from clients:
- Can I file bankruptcy and keep my house?
- Can I file Chapter 7 and keep my house?
- Can I file Chapter 13 and keep my house?
Many times, the answer is yes. Most people that declare bankruptcy in the State of Texas can keep their houses throughout the process and after its over, due to strong exemptions provided by the state.
Chapter 7 and Chapter 13 Bankruptcy are distinct from one another, and each is available to an individual depending upon the severity of his or her personal debt. Chapter 7 Bankruptcy is known as liquidation bankruptcy, and involves most of the filers property, sometimes even including the house, being sold to pay off debts. It is generally used by people who have limited income or no income and lack the ability to pay back anything on their debts for the foreseeable future.
Chapter 13 Bankruptcy, on the other hand, is known as reorganization bankruptcy. Filers of Chapter 13 Bankruptcy work with the Court to develop and follow court-ordered repayment plans which last typically for three to five years. Chapter 13 filers usually keep their personal and real property while paying back a portion of their debts.
Consult your bankruptcy attorney in Houston for the legal implications and long term planning in this regard.
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Property In Chapter 7 Bankruptcy
The trustee will liquidate any nonexempt property and distribute the proceeds to your unsecured creditors. An unsecured creditor is different from a secured creditor because it doesnt have the right to take back your propertyyour car or home if you dont pay your debt.
The trustee doesnt treat all unsecured debts the same but instead disperses funds according to the priority of the particular creditor. For instance, a past due support obligation is higher in priority than an overdue tax debt, which in turn has more priority than a credit card debt .
So, if the trustee gets $20,000 from the sale of your sailboat, and you owe $10,000 in child support, $15,000 in taxes, and $50,000 in credit card debt, the trustee will make the following distributions:
- $10,000 towards child support arrearages
- $10,000 for unpaid tax , and
- $0 for credit card debt.
In some cases, you can buy your nonexempt property from the trustee at a discount. For instance, if you own a car free and clear worth $15,000, but your states vehicle exemption is $5,000, you can pay $10,000 to the trustee to keep the vehicle. Its not uncommon for the trustee to reduce the price by the amount it would take to sell the property so you might pay only $8,000.
Keep in mind that your case is unique. A bankruptcy attorney can review your situation and explain what will happen to your property, as well as the cost to file for Chapter 7.
What Is An Automatic Stay
After you file for bankruptcy, you have the protection of an immediate, but temporary, automatic stay. The automatic stay can, for example, immediately stop a foreclosure, an eviction, car repossession, or wage garnishment. It can also stop debt collection, harassment, and disconnection of utilities.
The automatic stay may provide a powerful reason for filing for bankruptcy. In most of the situations listed above, the automatic stay can buy you a few days or weeks in which to figure out your next move. If your primary motivation in filing bankruptcy is to gain the benefits of the automatic stay, you donât need to file all of your papers at once. You just need to file the three-page petition, a signature declaration, and a listing of your creditors. In addition, within 180 days prior to filing, you will have to visit an approved credit counseling agency for advice and budget analysis. You will have to file a certification of such counseling when you file your petition. You have 15 days in which to file the rest of your papers. If you donât, your case will be dismissed.
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Qualifying For State Exemptions
The state you file for bankruptcy in is usually determined by the state you have lived in for the past two years.
If you haven’t lived in any state for at least two years, however, your place of âresidenceâ will likely be the place where you spent the majority of your time for the six months leading up to two years ago.
Hereâs an example: Say you have been living in Arkansas for the past year and a half. Before living in Arkansas, you lived exclusively in Texas for 4 years. Because you haven’t been living in Arkansas for the required two years, you will be counted as a Texas resident.
This means that you will choose between Texas’ Chapter 7 bankruptcy exemptions or the federal bankruptcy exemptions.
If You Have Multiple Mortgage Loans
Under Chapter 13, a borrower who has multiple mortgage loan on the same house can get all but the primary categorized as unsecured debt. That means they go into the category thats covered by your ability to pay, and likely wont have to be paid back in full. This only comes into play if you owe more on the house than its worth.
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What Happens To The Property I Own That Is Subject To A Lien
In some cases, the Bankruptcy Court can set aside or reduce a lien on your property. Additionally, individuals who want to keep the property secured by a lien can enter into reaffirmation agreements with the secured creditors. Under a reaffirmation agreement, the debtor promises in writing to continue to pay the amount owed to the creditor despite the bankruptcy and in return, the creditor agrees to not seize the secured property so long as the debtor continues to make the necessary payments. All reaffirmation agreements must be filed with the bankruptcy court. If you default on your payments under a reaffirmation agreement, the creditor can hold you liable on any deficiency and repossess the secured property accordingly.
What Assets Can I Keep In Bankruptcy In Nova Scotia
- Reasonably necessary wearing apparel, household furnishings and furniture
- Necessary fuel and food
- Necessary grain, seeds, cattle, hogs, fowl, sheep and other livestock for the domestic use of the debtor and his family
- Necessary medical and health aids
- Farm equipment, fishing nets, tools and implements used in debtors chief occupation, not exceeding $7,500
- Motor vehicle not exceeding $6,500
For further details on what you can keep, book a free consultation with a Licensed Insolvency Trustee.
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Check What You Can Keep
There are some belongings the official receiver cant sell. Theyre called exempt belongings.
You can usually keep the following items:
- household equipment, such as a cooker
- tools and equipment for your job – if you use them yourself rather than lend them to someone else
- a car or other vehicle you need for work or your basic needs – for example, if youre disabled and cant go anywhere without a car
- a car or other vehicle you need to care for a dependant
- other belongings that are necessary for your basic family needs
If youre still paying for something on hire purchase, the official receiver might sell it – even if it would usually be exempt. If youre not sure something is hire purchase, check if the loan agreement includes the words hire purchase.
The official receiver might also sell something exempt if its valuable. Theyll only sell it if theyd get enough money to replace it with something cheaper and have money left over to pay your creditors.. For example, if they sell an expensive car theyll give you £1,250 to buy another car and use the rest of the money to pay your creditors.
The official receiver can sell items which aren’t needed for your job or your basic home needs. This includes:
If someone will buy your belongings for you, tell the official receiver. Theyll usually agree if the person pays what the belongings are worth.
You Can Keep Everything If You Are Eligible For Chapter 13 Bankruptcy
Commonly called debt restructuring, a Chapter 13 bankruptcy is the second most common type. It is often used by those with a steady income or with a higher net worth who would like to preserve their assets, such as a car or a home. Debt reorganization is focused on restructuring and consolidating debts. You will be required to follow a strict repayment plan to eliminate the debt in a set time frame, using a portion of your regular income. This type of insolvency solution does not require you to give up your belongings, but there are additional requirements to file for this option, such as:
Secured Debt There is a cap for secured debt of $1,257,850. These debt limits change periodically. Secured debt is made up of amounts owing where an asset was used as collateral to obtain funds , or where the property or belongings with money owing on them have resale or residual value or have a down payment that was given as security . In simpler terms, this means that if the debt required a list of assets to obtain, or if it is for the purchase of an asset, it would likely be considered a secure debt.
Another mandatory step to filing both a Chapter 7 and a Chapter 13 bankruptcy is that you must be willing to go through credit counseling. Credit counseling is an excellent idea for anyone thinking of any type of financial support or bankruptcy proceeding. Positive money management can reduce your personal risk as well as help you repay debts more efficiently.
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Take Your First Step Towards A Debt Free Life
If you are overwhelmed by debt and live in the Toronto area, call us at 416-498-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you.
What Debts Cannot Be Discharged In Bankruptcy
The following debts cannot be discharged in either a Chapter 7 or a Chapter 13 bankruptcy case. If you file Chapter 7, you will still owe these debts after your case is over. If you file Chapter 13, these debts will either be paid in full during your plan, or the balance will remain at the end of your case.
Nondischargeable debts include:
- Unlisted debts, unless the creditor had knowledge of your bankruptcy filing.
- Recent income tax debt and other tax debt.
- Fines imposed for violating the law.
- Student loans, unless you can show that it will cause a hardship for you to repay them.
- Debts you owe under a divorce decree or settlement.
In a Chapter 7 and 13 case, a creditor may object, and a judge may agree, to theseadditional debts being discharged:
- Debts incurred by embezzlement, fraud, or larceny.
- Certain credit purchases made within 90 days or cash advances made within 70 days of filing.
- Restitution or damages awarded in a civil action for willful or malicious injury to a person.
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